Porter 5 Forces – Panera Bread Company Essay

Panera Bread Company competes on many levels of fast casual dining and specialty foods. Panera’s main competitors include McDonald’s, Starbucks Coffee and the Subway. There are many restaurants from national, regional and local that Panera competes with and each has a negative impact on company’s revenue. Panera offers an atmosphere that invites customers to stay for awhile with good food, good ambiance, comfortable chairs, calming music and Wi-Fi. Panera also takes advantage in changing their menus over competitors to sustain the interest of their customers.

Threats of New-Entry

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The threat of new entry is high because the food industry is a large pool of candidates. People are always looking for something new and different may it be a place to eat or stop by. Also, many restaurants do not stay long in business because of bad menus, bad dining experience, bad food quality and service.

Threats of Substitution

The threat is relatively low but the main substitutes to Panera Bread Company is on their atmosphere and coffee selections. Panera Bread Company has created an atmosphere in which people can eat and relax or stop by at the restaurant. A substitute for this could be stopping by at malls or just eat from home. Panera has to offer people a reason to come into their restaurant as an alternative to the mall or their home. The company competes with this substitute by offering a professional calming environment for them to enjoy and find pleasure.

Buyer Power

Buyer power is relatively high for Panera Bread Company. The restaurant is in tune with the customers preferences or else the customers will easily go to other restaurants. One food product makes the buying bargain power of customer high and a low switching cost in choosing another restaurant over Panera. Panera Bread Company recognizes the changing taste preference of customers and thus, offers a wide range selection of menu items for customers to enjoy.

Supplier Power

Panera’s suppliers have a relatively low bargain power because they implement a lot of restriction to keep their bargain power low. Panera Bread Company controls the quality of their products by making the bread themselves daily. They have a numerous contract to suppliers to keep an individual suppliers bargaining power low. Also, they have contracts with suppliers and distributors to control the cost of their supplies.